Vocabulary:

asset financing - финансирование активов: привлечение кредитов для оплаты приобретения тех или иных активов или высвобождения средств, вложенных в данные активы; обычно такие кредиты обеспечены теми же активами, для финансирования которых они привлечены (напр., финансирование под дебиторскую задолженность, финансирование под обеспечение товарно-материальными запасами, лизинг, покупка в рассрочку и т. д.)

leasing - лизинг, долгосрочная аренда оборудования

VOCABULARY CHECK

1. Балансовый отчет по структуре обычно представляет собой таблицу, на левой стороне которой указываются активы, на правой — собственный капитал и обязательства; активы и обязательства компании показываются в балансе с подразделением на долгосрочные и краткосрочные.

2. К основным активам относятся материальные, такие как оборудование, компьютеры, здания, земля, которые фирма приобретает для длительного пользования, и нематериальные.

3. Значение неосязаемых активов, таких как деловая репутация, торговая марка, нельзя недооценивать.

4. Собственный капитал рассчитывается как разница между совокупными активами предприятия и его обязательствами (пассивами).

5. В Великобритании термин ‘depreciation’ употребляется только по отношению к материальным активам, а для обозначения амортизации нематериальных активов используется термин ‘amortization’.

6. Балансовый отчет компании может содержать резервы по сомнительным долгам, а также резервы предстоящих расходов и платежей.

Section 3 financial statements and the bottom line lead-in

Along with the balance sheet, companies generally include two more financial statements in their annual reports.

The profit and loss account (Br.E) or income statement (Am.E) shows earnings or income and expenditure. It usually gives figures for total sales or turnover, and costs, expenses and overheads. In theory, if a company makes more money than it spends, it makes a profit. If not, it makes a loss. But it’s possible for a company to show a profit for a particular period because of the way it presents its activities under the accounting standards or accounting rules of one country, and a loss under the rules of another.

A pre-tax profit or a pre-tax loss is one before tax is calculated.

The final figure for profit or loss is what people call informally the bottom line. This is what they really worry about! The bottom line also means the final result or the most important aspect of something.

Below is an example of a consolidated profit and loss account according to international accounting standards (IAS) of Nokia:

Financial year ended December 31	Notes	2006 EURm	2005 EURm	2004 EURm
Net sales		41121	34 191	29 371
Cost of sales		-27 742	-22 209	-18179
Gross profit		13 379	11982	11192
Research and development expenses		-3 897	-3 825	-3 776
Selling and marketing expenses	6	-3 314	-2 961	-2 564
Administrative and general expenses		-666	-609	-611
Other income	7	522	285	343
Other expenses	7,8	-536	-233	-162
Amortization of goodwill	10	_	-	- 96
Operating profit	2-10	5 488	4 639	4 326
Share of results of associated companies	15,33	28	10	-26
Financial income and expenses	11	207	322	405
Profit before tax		5 723	4 971	4 705
Tax	12	-1357	-1281	-1446
Profit before minority interests		4 366	3 690	3 259
Minority interests		-60	-74	-67
Profit attributable to equity_holders_of the parent		4 306	3 616	3 192
Earnings per share (for profit attributable to the equity holders of the parent)	30	2006 EUR	2005 EUR	2004 EUR
Basic		1.06	0.83	0.69
Diluted		1.05	0.83	0.69
Average number of shares (1000 shares)	30	2006	2005	2004
Basic		4 062 833	4 365 547	4 593 196
Diluted		4 086 529	4 371239	4 600 337

If a company is making a loss, commentators may say that it is in the red. They may also use expressions with red ink, saying, for example, that a company is bleeding red ink or haemorrhaging red ink. The phrase "in the red" is used widely to refer to companies that have not been profitable within their last accounting period. This term is derived from the color of ink used by accountants to enter a negative figure on a company's financial statements. The phrase "in the black" is widely used to refer to the condition of companies that have been profitable in their last accounting period.

The third financial statement has various names, including the funds flow statement, source and application of funds statement (Br.E), cash flow statement and the statement of changes in financial position (Am.E). This shows the flow of cash in and out of the business between balance sheet dates.

Whereas the profit and loss account concentrates on whether a profit or loss has been made and a balance sheet shows the current worth of the business, a cash flow statement concentrates on cash.

A cash flow statement records the cash received by a business during the year and the flows of cash out. It therefore indicates where the firm’s cash funds have come from and how they have been used.

By concentrating on cash – or liquidity – these statements help managers realize why a profitable business might be running out of cash. Perhaps substantial capital investment has been undertaken, or goods have been sold but creditors are being given much longer to pay. These accounts will also explain why a loss-making business might be ‘cash rich’. Perhaps a loan has been taken out, creditors have paid back more quickly than usual or a new capital injection from investors has been made.

Cash flow can be used as an indication of a company's financial strength. A business with cash flow difficulties may ask its bank for an overdraft, which is an instant extension of credit from a lending institution. Their account at the bank is then in the red. This is a form of financing from the bank (and an expensive one), and the business’s receivables are security for this financing.

VOCABULARY

profit and loss account (Br.E) income statement (Am.E)	- отчет о прибылях и убытках, отчет о результатах хозяйственной деятельности
consolidated profit and loss account	- консолидированный (сводный) отчет о прибылях и убытках, (показывает результаты хозяйственной деятельности группы компаний как единого целого)
make a profit make a loss	- получать прибыль - нести убытки
accounting standards accounting rules	- стандарты (бухгалтерского) учета
International Accounting Standards (IAS)	- Международные стандарты бухгалтерского учета (финансовой отчетности); МСФО
pre-tax profit pre-tax loss	- прибыль до вычета налогов - убыток до налогообложения (до вычета налогов)
bottom line	- нижняя черта, итог, баланс доходов и расходов (прибылей и убытков) (итоговая строка в финансовой отчетности, показывающая чистые прибыли и убытки); чистая прибыль (размер прибыли после налогообложения); окончательный результат; важный (основной, главный) фактор
in the red	- с убытком; выражение, используемое для обозначения убыточных операций, т. к. раньше в бухгалтерских книгах убытки записывались красными чернилами
red ink	- убытки, потери; отрицательное сальдо (баланса, финансового отчета)
bleeding red ink haemorrhaging red ink	- истекающий кровью, обессиленный; стоящий на грани банкротства
in the black	- без убытков, с положительным сальдо, с прибылью: выражение, используемое для обозначения безубыточных операций
cash flow statement funds flow statement source and application of funds statement (Br.E) statement of changes in financial position (Am.E)	- oтчет о движении денежных средств, отчет о денежных потоках, отчет об источниках и использовании фондов
capital investment	- капиталовложения, инвестиции в основной капитал
overdraft	- превышение кредита (в банке); овердрафт; задолженность банку: сумма сверх остатка на текущем счете в банке, на которую может выписываться чек
security	- обеспеченность (напр. кредита), залог

COMPREHENSION QUESTIONS:

1. What financial statements are generally included in companies annual reports?

2. What information is given in the profit and loss account?

3. What is the bottom line?

4. When are the expressions ‘bleeding red ink’ or ‘haemorrhaging red ink’ used?

5. In what connection are the phrases ‘in the red’/’in the black’ used?

6. What does cash flow statement show?

7. In what way does the cash flow statement differ from the income statement?

8. What is overdraft?

VOCABULARY PRACTICE

Ford has now lost money in North America in seven of the past eight quarters. The region had a pretax loss of $1.6 billion in 2005.

Automotive units in South America, Ford of Europe and Asia- Pacific reported profits. South America's $95 million pretax profit widened from the year-ago $88 million pretax profit; Europe's pretax profit expanded to $105 million from $66 million; and Asia Pacific's pretax profit fell to $4 million from $36 million in 2005's second quarter.

The bottom line is the first thing many investors look at to gauge a company's profitability.

The NHS in England will be £750m in the red by the end of the financial year on 31 March, a BBC survey suggests.

What does a company bleeding red ink in the cutthroat PC industry do with spare cash that it nets from laying off its employees and outsourcing the jobs to India? HP goes shopping!

‘ATI is back in the black’. ATI returned to profitability during the three months to 30 November 2005, the first quarter of the graphics company's 2006 fiscal year.

Overdrafts are generally meant to cover short-term financing requirements - they are not generally meant to provide a permanent source of finance

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